Summary
Atmos Energy Corporation (ATO) announced on February 12, 2020, the execution of an Equity Distribution Agreement, establishing a program to sell shares of its common stock worth up to $1 billion. This program allows for the sale of shares through designated managers as sales agents, either directly at market prices or through block transactions, and also includes provisions for forward sale agreements. These forward sale agreements allow Atmos Energy to potentially receive proceeds at a later date, while the forward purchasers may borrow and sell shares to hedge their positions in the interim.
Key Highlights
- 1Atmos Energy has established a "at-the-market" (ATM) equity offering program allowing the sale of up to $1 billion in common stock.
- 2The equity offering will be conducted through designated "Managers" acting as sales agents on the New York Stock Exchange.
- 3The program includes provisions for entering into "forward sale agreements" with "Forward Purchasers".
- 4Under forward sale agreements, Forward Purchasers may borrow and sell shares to hedge, with Atmos Energy expecting to receive proceeds upon future settlement.
- 5Atmos Energy is not obligated to sell any shares and can suspend or terminate the program at any time.
- 6Sales agents (Managers) will receive a commission of 1.00% of the gross offering proceeds for shares sold.
- 7The shares will be issued under Atmos Energy's existing automatic shelf registration statement filed on Form S-3.
Frequently Asked Questions
The Equity Distribution Agreement allows Atmos Energy to opportunistically sell up to $1 billion worth of its common stock over time. This provides the company with flexibility to raise capital, potentially for general corporate purposes, debt repayment, or funding growth initiatives, by selling shares directly or through forward sale agreements.
Shares will primarily be sold through the New York Stock Exchange, either as ordinary broker transactions at market prices or in block transactions, via designated "Managers" acting as sales agents. The Managers will receive a commission of 1.00% of the gross proceeds from shares sold through them.
Forward sale agreements allow Atmos Energy to agree today on a future sale of shares. The "Forward Purchasers" involved may borrow shares to sell them immediately to hedge their commitment. Atmos Energy expects to receive the sale proceeds upon the future physical settlement of these agreements, though other settlement methods exist where proceeds might not be received or additional payments may be owed.
No, Atmos Energy has no obligation to offer or sell any shares under the agreement. The company can suspend or completely cease sales under the program at any time, offering significant flexibility in how and when it chooses to access capital through this equity offering.